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Heather Scoffield and Mike Blanchfield, The Canadian Press
Published Wednesday, February 13, 2013 1:56PM EST
Last Updated Wednesday, February 13, 2013 5:21PM EST

OTTAWA -- President Barack Obama's State of the Union message to act swiftly on climate change should be interpreted as a challenge to Ottawa as well, says the U.S. ambassador to Canada.

Obama used Tuesday's speech to present Congress with a choice: either agree to market-based solutions to climate change, or else the president will use his executive powers to achieve the same result.

In an interview with The Canadian Press, Ambassador David Jacobson said the message to move more aggressively against climate change was meant as much for Canada as it was for the United States.

"We all need to do as much as we can. And that is true in your country and in mine," Jacobson said.

"Obviously the more that the energy industry -- whether it is the oilsands in Canada or the energy industry in the United States, or any place else -- the more progress they can make to reduce greenhouse gas emissions, to reduce their consumption of water, to other environmental consequences, the better off we all are."

It was the signal many environmentalists in Canada have been waiting for.

"Canadians have not been well-represented by our government on action on climate change. Fortunately for Canadians, though, the Harper Conservatives will have little choice but to follow suit or risk our trading relationship with our biggest partner."

U.S. action on climate change has been piecemeal over the past few years as Obama's initiatives met with stiff Republican resistance. Ottawa has vowed to move no faster than the U.S. for fear of risking Canada's competitive advantage.

Indeed, Conservative MPs have made a daily sport out of criticizing carbon taxes and cap-and-trade schemes.

But now that Obama has suggested he wants to crack down on emissions, either through a market-based approach or regulations, Canada is going to have to regroup, said Alex Wood, senior director at Sustainable Prosperity, an Ottawa-based think tank.

"The question is whether we will be able to keep up," he said. "We may have to pay a price for not having a serious policy around climate change."

Ottawa has opted to take a regulatory approach to emissions, imposing restrictions on industry sector by sector in a process that is taking many years to unfold and decades to implement. At last count, federal and provincial measures taken together still only get Canada half way to meeting its emissions reductions targets by 2020.

That leaves the as-yet-unregulated oil and gas sector to make up most of the difference, and negotiations with that industry and Alberta are proving difficult.

Still, the initial government reaction to Obama's climate change agenda was nonchalant.

Natural Resources Minister Joe Oliver said the president's speech contained a little bit for everyone on all sides of the climate debate.

"And therefore I don't feel any different than I did before the speech," he said.

While Environment Minister Peter Kent has suggested in the past that Canada might consider a cap-and-trade system to control emissions if the United States moves in that direction, Oliver was dismissive of that idea Wednesday.

"This is quite speculative. It doesn't look like Congress would be supportive of that. They've rejected it historically, and we're not in that space."

Still, there are signs federal ministers are feeling some pressure to up their game on the emissions front, especially with the controversial Keystone XL pipeline from the Alberta oilsands through the United States hanging in the balance. Oliver and Kent have both recently spoken about the need "to do more" on Canada's environmental credentials.

Obama did not mention the pipeline in Tuesday's speech, but he faced calls from organized labour and the petroleum industry on Wednesday to approve the project immediately -- even as protesters in the U.S. geared up for a demonstration against it this weekend.

In a preview of further protests planned for Sunday, prominent U.S. environmental leaders -- including Michael Brune, the executive director of the Sierra Club -- were arrested Wednesday after tying themselves to the White House gate.

Washington-based stakeholders from both sides of the border increasingly suspect Obama is going to try to extract from the oil industry and Republicans some kind of quid pro quo -- either a carbon-pricing scheme or limits on greenhouse emissions from existing power plants in exchange for approving Keystone.

"He's a deal-maker," said a source close to the Keystone discussions not authorized to speak to the media. "He wants to get something in return, whichever way he goes."

Such chatter underlines the fact that Canada and the U.S. are "on very different trajectories" since there is no indication that Environment Canada would entertain putting a market price on carbon, said Clare Demerse, director of federal policy for the Pembina Institute, an energy and environment think tank.

Obama's new-found determination on greenhouse gases will no doubt prompt him to assess the Keystone pipeline through an environmental lens, Demerse said. If that pipeline is filled with oilsands bitumen, the implications for emissions are major, both in Canada and the U.S.

Jacobson would not predict when Obama's Keystone decision will come, but he said the president's focus on global warming "very much mirrors where the Canadian people are" on energy and climate issues.

"We need to strike the right balance between our need for energy on one hand and safe and secure sources of energy. Clearly Canada is one of those (sources), and our need to deal with the environmental consequences particularly of fossil fuels."

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Photos

U.S. ambassador to Canada David Jacobson delivers a speech on the impact of the U.S. election on Canadian-American relations in Montreal in this December 2012 file photo. (Ryan Remiorz/ THE CANADIAN PRESS)